“Monopolists do not worry about efficient production and cost saving since they can just pass along...
“Monopolists do not worry about efficient production and cost saving since they can just pass along any increase in costs to their consumers.” Is this statement true? Explain your answer. Also, include cost curves to illustrate.
Homework Answers
The statement is partially true.
The reason it is being said is that a monopolist generally does not produce the output where the ATC is the lowest i.e. the most efficient production
Monopolists produce where he gets the maximum profit, it is at the quantity where marginal cost equals marginal revenue. But, it is also not true that it can transfer every increase in costs to the consumer. Thus, the statement is partially true.
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